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For the past five years Ukraine has been living in anticipation of the EURO 2012 football championship. State officials assured the event will accelerate the development of the Ukrainian economy and attract additional investments into the country. The realities turned out to be less bright: preparation of the infrastructure for EURO 2012 was almost fully financed from the country’s national budget, meaning the taxpayers’ money. On the whole, the economy did not see any additional opportunities that would mitigate the impact of the global economic crisis. Instead, businesses close to the government enjoyed unlimited access to budget financing and official preferences. Government officials that conveniently based their promotional campaigns on EURO 2012 came out winners as well
Who got the contracts
After waiting for foreign investors in vain, Ukraine’s leadership had to finance the construction of the necessary infrastructure out of state coffers. For this reason, over the last couple of years tenders for the construction of EURO 2012 facilities got extremely lucrative. The Donetsk-based company Altcom was the leader in terms of landed contracts. Rumor has it that the company is somehow connected to Vice Premier and Minister of Infrastructure Borys Kolesnykov, although nobody has been able to prove direct relations between the official and the company that has got billions of budget money.
According to certain calculations in 2011 alone the company earned approximately UAH 7 bn on state contracts for the construction of highways, airports and stadiums. It is closely followed by another Donetsk company, AK Engineering, which is most famous for its project for the reconstruction of the Olimpiyskiy National Sports Complex in Kyiv. The company’s total profits from state procurement tenders are estimated at UAH 2 bn.
The Churkin brothers, co-owners of the Lviv Bus Factory, also got the chance to make a pretty penny. On the peak of preparations to the championship, the factory received a direct contract from the Ministry of Infrastructure to manufacture 1,500 buses and 500 trolleybuses for EURO 2012 host cities for the total sum of UAH 3.5 bn. However, as of the end of 2011 only UAH 200 mn were allocated from the national budget to pay off interest on loans - something that many municipalities did now expect as they had hoped to receive public transport vehicles for free.
Last November, National Television Channel of Ukraine and Rinat Akhmetov’s TV channels Ukraine and Football won tenders for broadcasting the EURO 2012 matches in Ukraine. 1 minute of commercials on those channels during group matches will cost UAH 3 mn on average, meaning the channels can earn over UAH 2 bn, even though they will have to share some of the profits with UEFA.
The most useless projects
The large-scale construction and reconstruction of existing training grounds at university and school stadiums and former sports schools for teenagers can be called the most useless EURO 2012 project. According to the program for preparations to the EURO 2012 finals local authorities were supposed to construct training grounds for 3,123 athletes over the past 5 years. There were plans to spend UAH 861,325 mn on small stadiums in host cities and within a radius of 100 – 200 km from them, for example, in Poltava, Sevastopol, Zaporizhzhya and the suburbs of Kyiv. UAH 531,315 of that sum was allocated from the national and local budgets. However, at the end of January it turned out that besides the Ukrainian national team of all the 16 national teams that will compete in the championship in Ukraine and Poland, only the national teams of Sweden and France will be accommodated at training grounds in Kyiv and Donetsk, respectively.
Winners of the PR wars
In terms of self-promotion with the help of EURO 2012, there are no equals to Vice Premier and Minister of Infrastructure Borys Kolesnykov. Judging from a number of reports, Ukraine would not be able to hold the championship without him. The subject of football subject or to be more precise preparations for the upcoming event has increased the number of TV appearances of Chief of the State Customs Service Ihor Kaletnyk, who also simultaneously tried to push through amendments to the Customs Code of Ukraine that would significantly expand the powers of his department. Rumor has it that the Epicenter chain of construction supermarkets, which is one of the largest companies in Ukraine owned by the current Secretary of the Kyiv City Council Halyna Hereha, was safeguarded from the encroachment by of law enforcers and financial departments owing only to the UEFA sponsorship package. Also, it was only thanks to EURO 2012 and strict UEFA rules on the usage of its logos on memorabilia that the broad public in Ukraine heard the name of director of the ProstoPrint company Denys Oliynykov, who manufactured T-shirts with the print that can be vaguely translated as ‘Thanks to Donbas residents for our f..t president’.
EURO 2012 impoverished Ukrainians
Initially it was planned that only 20% of required financing of EURO 2012 will be taken from the national treasury and the rest of the sum will be provided by investors. De facto, the expenditures, including state guarantees given for preparations to EURO 2012, exceeded 80% of total expenditures. Actually, private investments fully worked only Kharkiv, where renowned businessman Oleksandr Yaroslavskiy took over the construction of infrastructure facilities, including hotels, the airport and the stadium. In Donetsk, Rinat Akhmetov has limited his presence only down to the new stadium. In Kyiv and Lviv, any involvement of any outside investors was out of the question. The only investor noticed in the construction of the transport infrastructure in Kyiv was the Amadeus Co LLC, which will spend UAH 541 mn on the construction of a helipad for the president. On the other hand, if to take into account the connection between the construction of such a complex and scandalous purchasing of the so-called ‘Boiko’s oil rigs’ exposed by the media, the company’s money can hardly be labeled as private investments. As such, Ukrainian citizen was made to pay cough up for the championship through additional taxes. Over the past 5 years UAH 65.34 bn was taken from the national and local budgets. For every Ukrainian this comes out to UAH 1,420 over 5 years or UAH 284 for every year of preparations for the grandiose European football spectacle.
What EURO 2012 will deprive Ukrainians of
The money spent on preparations for EURO 2012 could be used for much more benevolent purposes. By the way, that very same UAH 65 bn was envisaged in the national budget of 2012 for servicing the country’s national debt. By the way, this is far from the only possible alternative for rationally spending such a considerable amount of money. For example, this sum could be spent on the construction of hospitals and outpatient clinics for family physicians, the number of which is critically insufficient within the framework of the planned healthcare reform. On average UAH 1 mn is spent from the national budget on one outpatient clinic. The whole country needs approximately 10,000 such clinics (on average 4,000 – 5,000 people per outpatient clinic). The rest of the sum could be spent on the construction of perinatal centers in every county, which would cost approximately UAH 20 bn and specialized hospitals in every oblast center for approximately UAH 30 bn.
The housing and utilities sector could also use UAH 65 bn. For example, at least UAH 1 mn is required for heat insulation of 230,000 apartment buildings built in different years. The oldest and most dilapidated buildings can be heated for the money spent on EURO 2012 preparations.
This same UAH 65 bn could be spent on the construction of new roads and highways and the reconstruction of existing ones. According to the most unpretentious calculations of Ukravtodor, it costs UAH 1 – 3 mn to repair 1 km of highway in Ukraine. In other words, this amount of money would be enough to cover the cost of patching up potholes along half of the 170,000 km of highways and country roads throughout the entire country.
Cost of EURO 2012 per tourist
From the looks of it Ukraine can expect only well-to-do fans to attend the championship. Accommodation is one of the main line-items on the expenditure side of the budget. The price range is quite impressive – from hotel rooms and apartments for UAH 6,000 – 8,000 per night (it is also possible to find rooms in 3-4 star hotels for UAH 1,500 – 2,000) to camping sites for UAH 400 – 800 per 1 day living in a tent (the same price can be found in apartments for rent by individual owners).
Let us assume that an average fan will spend a minimum of 3-5 days in Ukraine for group matches plus a few days for excursions and sightseeing. It is most likely that daily expenses for food, drinks and booze will be a minimum of UAH 150. Having three meals a day at least UAH 2,300 will be spent on food over 5 days. Add to this sum expenses for public transport as foreign guests in Ukraine will actively use taxis. Taking Kyiv as an example with its operating system of centralized transportation between the city and Boryspil International Airport we can assume that foreigners will overpay for such services by 2-3 times. So, a one-way trip for UAH 100 will be considered a stroke of good luck.
Further, it is quite possible that in order to simplify payments taxi drivers may charge for fares in euro during the championship. If we assume that a foreigner will not spend more than UAH 300 – 400 per day for a taxi, the total amount spent on transportation services will be approximately UAH 1,500. So, 5 days – not including excursions, souvenirs and night parties or entertainment – will cost each tourist at least UAH 11,300 (a bit more than EUR 1,000).
EURO 2012 as a smokescreen
EURO 2012 gives the opportunity to many lobbyists to legalize minimization schemes at the legislative level. First of all, it allows purchasing any goods, works and services under a simplified non-tender procedure within the framework of preparations for the championship. Secondly, hospitality industry was granted special privileges: all 3, 4 and 5-star hotels that will be commissioned by September 2012 will be exempt from paying the corporate profit tax for another five years. In addition, their owners will be compensated interest on loans they took out. Initially the regulation was written in the Tax Code so vaguely that all developers of office centers rushed to build hotels and hotel complexes. The wording in the law made it possible to name any buildings with only a few rooms a hotel. Later amendments were made to the code according to which such a privilege is applied only to profits from hotel business activities and only if such business brings its owners 75% of the total profits. Thirdly, developers were given a chance to alienate land plots they like under the pretext of “public necessity”. Back in the days of Viktor Yushchenko amendments were made to the law allowing for the alienation of land for stadiums and other sports infrastructure facilities. The Party of Regions repeatedly tried to to push through a bill that allowed alienation of such land plots for the the construction of facilities involved into maintenance and servicing for EURO 2012, i.e. in unlimited zones around sports venues. However, the most offensive bill (fortunately it has not yet been passed) was the one initiated by Mykola Azarov’s government on duty and VAT-free import of a whole list of products and memorabilia dedicated to EURO 2012. The government planned to import such items as rugs, hats, food processors, food products and even gold bars under the auspices of this bill.
Dead tourist routes
All bodies that were not lazy have worked on developing tourist routes for EURO 2012 over the last several years, including the Ministry of Culture, specialized administrations in host cities and authorized state services. The quality of routes they plan to offer is none other than “shooting oneself in the foot” as the majority of foreign guests during the championship, particularly in Donetsk, will never take such unpalatable bait.
If they do decide to go on such an excursion they will definitely regret it. For example, why would European football fans take the tour named Vasyl Stus and Alla Horska around the Donetsk Oblast (how many Ukrainians know anything about Horska?) or want to discover the native village of Sergei Prokofiev, which is more likely to stagger foreigners with its ramshackle houses and ditches. Instead, they can check out an impressive exhibition in the local museum and the beauty of the village’s temple. In any case, the truly interesting and decent tourist routes in the Donetsk oblast can be counted on one hand.
What has not been done for EURO 2012?
Sports bars are still scarce. Many bars equipped with plasma TV screens and projectors were opened especially to attract a crowds of viewers to watch the football matches. Unfortunately, foreigners will have a hard time finding their way to such places and it will be even more difficult for them to reserve tables as most of these places opened only recently and are not listed in city guidebooks and did not place any ads targeted towards foreign tourists.
More public WCs needed. It seems that the organizers of EURO 2012 in most of the host cities are not planning to deal with the problem of the lack of toilet facilities. The best they can do is install additional portable toilets near EURO 2012 facilities (airports, stadiums, etc.). Indeed, in Kharkiv and Lviv only 10 0f 20 public restrooms are currently operating. In Kyiv the organized promised 400 new WCs, but at the moment only 30 plastic portable sanitation units temporarily connected to the city’s sewage system have been installed. Meanwhile, the Donetsk city authorities decided to show off by opening only five such public toilet facilities, albeit very expensive and ritzy.
Streets have no names. Only the Donetsk city government can boast about bi-lingual street signs. Directional signs in Kyiv and Kharkiv have not yet been made bilingual. Lviv, true, stands out among the host cities. Indeed, the names of streets are in two languages and directional screens have been installed in the city. However, it is still not clear whether foreigners will understand that the abbreviation vul. in front of the name of a street is the equivalent of St. in English.
Cops and physicians still do not speak English. Over the last 5 years law enforcers and medical workers have not been professionally taught English. The EURO 2012 Organizing Committee in Ukraine decided to solve the problem in a cheap and simple way – volunteers will translate for fans attending the championship in Ukraine from abroad.
Tourist police – an abandoned idea. Last year Ukrainian government promised to set up a special department for control over the quality of services provided by travel agencies and tour guides. Meanwhile, many foreigners have already gotten a good dose of the level of service offered by Ukrainian travel agencies having become victims of swindlers and fly-by-night companies, and tourist police became a forgotten concept.
Kyiv, Donetsk and Kharkiv city halls used to mention the need to create municipal taxi companies to drive foreign fans. Kyiv was the most progressive in this initiative where the services of the newly founded Sky Taxi company will offer its services at Boryspil International Airport. The city even leased 110 Hyundai Sonata cars. However, these taxi services will not likely be in high demand in the future, i.e. some government body or official will be able to buy the vehicles nearly scot-free after the championship. The situation with tourist buses and shuttle buses is similar. There are plans to buy 400 such vehicles especially for EURO 2012. Be that as it may, it seems rather doubtful that such a number of vehicles will be required after the championship is over. Another topic for discussion are tourist information centers. The city authorities in Donetsk, Kyiv and Lviv mentioned the need to establish such centers. Experts note that a plan was drafted for the allotment of land plots for such centers, while in the rest of the civilized world such premises and facilities are leased. On the other hand, it will be impossible to sell leased premises for dirt cheap after EURO 2012, while private premises or land plots in the center of the city can be sold for a dime. Information stands that will be located all over the city will be turned into standard advertising spaces after the championship.Printable version